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Electric heat pump water heaters, the most energy efficient electric option you can buy, use pressure to heat a liquid refrigerant that in turn heats water in a storage tank. They cost more than standard electric heaters, but they can pay back the difference in price in less than two years. An Energy Star model uses up to 65% less electricity than a standard electric water heater, and can save up to $3,000 over the life of the appliance.

Solar water heaters are eligible for a tax credit under a separate program. They’re best suited for mild to hot climates because energy savings can be reduced or diminished on cold and cloudy days.

has covered business and consumer issues for 18 years, most recently as a deputy editor at the Rocky Mountain News. He lives in a house built in the 1930s, and always keeps the home’s character in mind when making upgrades.